Middlesbrough Council made unlawful appointment and payments

Auditors say external specialists will be needed due to "deteriorating relationships" within the council

Urgent action is needed to improve a council that unlawfully employed an adviser and made wrongful payments to a publicity firm, a damning report found.

An audit of Middlesbrough Council called for external help to fix decayed relationships within the authority.

It stopped short of recommending the government take over the council but did not rule out some functions being run by independent commissioners.

Mayor Andy Preston was also criticised over his part in the Boho X project.

The report highlighted the elected Independent mayor's undocumented meetings with a Chinese state-owned developer which took place without council officers present.

Details of his failure to follow correct procedures had emerged earlier this year and the Boho X scheme saw £600,000 wasted after the skyscraper plan was scaled back.

Ernst and Young's report also revealed that between October 2019 and November 2020 the council unlawfully appointed an external advisor - through a local publicity company - to work directly with Mr Preston.

The council is entitled to fund a mayoral assistant but the post has been vacant since September 2019.

Auditors found the council was unable to explain the nature of the services provided, for which it paid £32,000, however, it accepted some probably fell under the remit of the mayoral assistant role.

The report added: "This arrangement was terminated in November 2020 after it was assessed by the council to be unlawful under the Local Authorities Regulations 2002.

"The payments made to the publicity company under this arrangement were therefore also unlawful, however, we note they were not material to our opinion on the council's financial statements."

'Toxic culture'

There was also found to be a "pervasive lack of trust" between council officers and councillors, and among the body of elected members.

This was "having a significant impact on the governance of the council and was a contributing factor to the respective roles and responsibilities of officers and members not being adhered to".

Ernst and Young concluded "urgent action" was needed to address "deep-rooted cultural and relationship issues".

Their report advises mediation from external specialists is required as relationships are so decayed the council will not be able to fix it on its own.

This needs to be done immediately and the auditors will follow up on the recommendation over the next six months.

If they are not satisfied with progress they will consider making formal statutory recommendations, which could lead to government intervention.

There have been calls for mayor Andy Preston to resign

In response to the report, Mr Preston said too many councillors were "selfish and lazy" and obsessed by "petty complaints".

He said the council had a "toxic culture" and an "unnecessarily hostile environment" but welcomed a third-party's input.

Labour Middlesbrough MP Andy McDonald called Mr Preston "unfit for office" and claimed that his time as mayor had been an "abject failure".

The MP and the council's Labour group leader, councillor Matt Storey, have both called on Mr Preston to resign.

Mr Storey said the authority was facing an "unprecedented crisis" caused by the mayor and there had been a "colossal waste" of taxpayers' money because of his incompetence.

Middlesbrough's Conservative group said it was "very disappointed, but not surprised" by the findings of the report.

Councillors Mieka Smiles, David Coupe and Luke Mason, who are all executive members, said "political game-playing" between a minority of Labour and Independent councillors was not helpful.